Entrust Announces Financial Results for First-Quarter 2009
- Total revenues of
- Product revenues of
- Deferred revenue increased to
- Entrust recorded a net income for the quarter, calculated in accordance with GAAP, of
- Cash and Cash Equivalents increased to
Revenues for the first quarter were
Deferred revenue increased 2 percent in the quarter to approximately
“We are pleased with our financial performance for the quarter,” said
Entrust recorded a Q1 2009 net income, calculated in accordance with GAAP, of
Entrust was also cash-flow-from-operations positive by
Because the company has entered into an agreement to be acquired by an affiliate of
Q1 2009 Financial and Operating Highlights:
- Revenue of
$22.6 million consisted of 42 percent product revenue ($9.4 million ) and 58 percent services and maintenance revenue ($13.2 million ). The top five product transactions accounted for 13 percent of Q1 2009 revenues. There were no product transactions accounting for more than$1 million in Q1 2009. Revenue from transactions less than$500,000 decreased 11 percent from Q1, 2008. - Revenue from subscription based product and services accounted for 56 percent of total revenue for Q1 2009, a decrease of 4 percent on a dollar basis, and an increase of 5 percent on a percentage of revenue basis from Q1 2008.
- Entrust Fraud and Risk Based Authentication products accounted for 25 percent (
$2.3 million ) of product revenue for Q1 2009. Subcategory Entrust IdentityGuard and Entrust Transaction Guard Products accounted for$1.4 million of product revenue for Q1 2009. - Entrust PKI products accounted for 75 percent (
$7.1 million ) of product revenue for Q1 2009. Subcategory SSL accounted for$2.8 million of product revenue for Q1 2009, an increase of 26 percent year-over-year. Subcategory Subscription Product accounted for 37 percent ($3.5 million ) of product revenue for Q1 2009, an increase of 21 percent year-over-year. - Product revenue for the quarter was 61 percent Extended Government and 39 percent Extended Enterprise. The financial services vertical accounted for approximately 31 percent of product revenue in Q1 2009.
- The average purchase size in the first quarter was
$57,000 , an increase from$50,000 in Q1 2008. Total transactions in Q1 2009 reached 109, which is down from 136 in Q1 2008. Twenty-nine transactions, or 27 percent of the total transactions were from new customers. - Deferred revenue of
$29.5 million increased 2 percent from Q1 2008. - Cash flow from operations was positive
$4.4 million for Q1 2009 before the net change in restructuring accruals. - Entrust ended the quarter with
$26.6 million in cash and cash equivalents and no debt.
Q1 2009 Technology and Industry Highlights:
- Gartner’s Magic Quadrant for Web Fraud Detection named Entrust as a “leader” based on its “ability to execute” and the company’s “completeness of vision.” According to Gartner, magic quadrant “leaders” are vendors who are performing well today, have a clear vision of market direction and are actively building competencies to sustain their leadership position in the market.
Michigan’s Oakland County selected Entrust Extended Validation SSL digital certificates to help instill a high level of citizen trust for their online eCommerce applications and services. More than 1.2 million citizens inOakland County , which bordersDetroit, Mich. , will be able to access their county eCommerce online services secured with Entrust EV SSL certificates.- In SC Magazine’s authentication review, Entrust IdentityGuard 9.1 received a five-star overall rating and was hailed as a “nicely integrated platform that provides all the options needed for any small to large enterprise deployment.” The group review, which compared products from 11 vendors, evaluated authentication solutions on the merits of features, ease of use, performance, documentation, support and value for the money.
- Entrust announced the launch of Entrust Code Signing Certificates, which offers customers a wide range of the most popular digital certificate types via the company’s easy-to-use Certificate Management System. The new Entrust Code Signing Certificates are used by application and software authors to instill legitimacy into their products. This technology — imbedded into the certificates within the software — is designed to enable end-users to verify the authenticity of an application, which is done by trusting the certification authority that issued the certificate.
- Entrust introduced Entrust IdentityGuard 9.2, which adds support for SMS soft tokens and digital certificates. This authentication solution was enhanced with improved administration and reporting, simplified enterprise integration and support for new integration partners. The release is designed to enable organizations to use digital certificates — stored locally or on secure devices like smart cards or USB tokens — for strong authentication. This new feature also is designed to enable organizations to send a configurable number of OTPs to a mobile device for use during authentication.
- SC Magazine UK named Entrust’s ePassport security solution as a finalist for their “Innovation Award.” Entrust’s ePassport solution was selected by a panel of industry experts from more than 600 entries submitted in the “Innovation Award” category.
- Entrust’s proven risk-based authentication solution was named finalist in the “Best Security Solution” category of the Software & Information Industry Association’s (SIIA) 24th Annual CODiE Awards. Entrust was selected as a CODiE finalist from more than 850 nominations submitted by some 600 companies. Through a unique combination of journalist and expert peer review, the CODiE Awards recognize 71 categories of outstanding products and services.
GAAP to Non-GAAP Reconciliation
The following charges for the first quarter of 2009, reconcile the GAAP and non-GAAP earnings per share:
- Stock-based compensation charge in accordance with SFAS 123R of approximately
$250,000 , or$(0.00) per share for the first quarter of 2009. - Amortization charges of intangible assets primarily associated with the acquisition of Business Signatures and Orion of approximately
$378,000 , or$(0.01) per share for the first quarter of 2009. - Adjusting for currency to maintain a constant currency when comparing first quarter results to prior year.
See table below for further details of Entrust’s supplemental reconciliation of GAAP to non-GAAP measures.
Use of Non-GAAP Financial Measures
To supplement the financial results that are prepared and presented in accordance with accounting principles generally accepted in the
The non-GAAP measures are included to provide investors with supplemental information to facilitate their understanding of Entrust’s operating results and future prospects. Management uses these non-GAAP measures to assess its success in reducing the company’s cost structure, to measure its ongoing cash operating costs, and to establish budgets and operational goals. The presentation of this additional information should not be considered in isolation or as a substitute for financial and operating results prepared in accordance with accounting principles generally accepted in
This press release contains forward-looking statements relating to the proposed acquisition of the company by an affiliate of
Important Additional Information Regarding the Proposed Acquisition
In connection with the proposed acquisition of the company by an affiliate of
The information in the preliminary proxy statement is not complete and may be changed. Before making any voting or investment decisions with respect to the proposed acquisition or any of the other matters with respect to which Entrust’s stockholders will be asked to vote pursuant to the proxy statement, Entrust’s stockholders are urged to read the definitive proxy statement and other documents filed by Entrust when they become available.
About Entrust
Entrust [NASDAQ: ENTU] provides trusted solutions that secure digital identities and information for enterprises and governments in 2,000 organizations spanning 60 countries. Offering trusted security for less, Entrust solutions represent the right balance between affordability, expertise and service. These include SSL, strong authentication, fraud detection, digital certificates and PKI. For information, call 888-690-2424, e-mail entrust@entrust.com or visit www.entrust.com.
Entrust is a registered trademark of Entrust, Inc. in
ENTRUST, INC.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share data)
Three Months
Ended
March 31st,
--------------
2009 2008
---- ----
Revenues:
Product $9,397 $9,630
Services and maintenance 13,239 16,208
------ ------
Total revenues 22,636 25,838
------ ------
Cost of revenues:
Product 2,130 2,362
Services and maintenance 5,764 7,855
Amortization of purchased product rights 128 345
--- ---
Total cost of revenues 8,022 10,562
----- ------
Total gross profit 14,614 15,276
------ ------
Operating expenses:
Sales and marketing 6,535 8,703
Research and development 3,010 4,742
General and administrative 3,343 3,116
----- -----
Total operating expenses 12,888 16,561
------ ------
Income (loss) from operations 1,726 (1,285)
----- ------
Other income (expense):
Interest income 23 131
Foreign exchange gain 85 20
Gain on sale of long-term strategic investments 41 18
-- --
Total other income (expense) 149 169
--- ---
Income (loss) before income taxes 1,875 (1,116)
Provision for income taxes 121 64
--- --
Net income (loss) $1,754 $(1,180)
------ -------
Weighted average common shares used
Basic 61,455 61,165
Diluted 61,455 61,165
Net income (loss) per share
Basic $0.03 ($0.02)
Diluted $0.03 ($0.02)
ENTRUST, INC.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
March 31, December 31,
2009 2008
---- ----
ASSETS
Cash and marketable investments $26,572 $24,312
Accounts receivable, net of allowance for
doubtful accounts 17,633 18,419
Other current assets 3,095 3,262
Property and equipment, net 1,250 1,290
Purchased product rights and other
purchased intangible assets, net 9,244 9,622
Goodwill 60,214 60,214
Long-term strategic and equity
investments 46 46
Other long-term assets, net 810 881
--- ---
Total assets $118,864 $118,046
======== ========
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable and accruals $13,771 $15,258
Accrued restructuring charges 12,244 13,612
Deferred revenue 29,485 27,756
Long-term liabilities 755 772
--- ---
Total liabilities 56,255 57,398
Shareholders' equity 62,609 60,648
------ ------
Total liabilities and shareholders'
equity $118,864 $118,046
======== ========
The following supplemental tables provide non-GAAP financial measures used
by the company's management to evaluate operational results. The company
believes this information may be useful to investors. In addition to
disclosing financial results calculated in accordance with U.S. generally
accepted accounting principles (GAAP), the company's earnings release
contains non-GAAP financial measures that exclude the income statement
effects of share-based compensation, amortization of purchase product
rights and other purchased intangibles, write-down of long-term assets and
non recurring restructuring and impairment charges, as well as adjusting
for currency effects to maintain a constant currency with the prior year's
results. The non-GAAP financial measures disclosed by the company should
not be considered a substitute for, or superior to, financial measures
calculated in accordance with GAAP, and the financial results calculated
in accordance with GAAP and reconciliations to those financial statements
should be carefully evaluated. The non-GAAP financial measures used by the
company may be calculated differently from, and therefore may not be
comparable to, similarly titled measures used by other companies.
Set forth below are reconciliations of the non-GAAP financial measures to
the most directly comparable GAAP financial measures.
For additional information regarding these non-GAAP financial measures,
see the Form 8-K dated April 28, 2009 that Entrust has filed with the
Securities and Exchange Commission.
ENTRUST, INC.
SUPPLEMENTAL
RECONCILIATIONS OF GAAP TO NON-GAAP MEASURES
(in thousands, except per share data)
Three Months Ended
March 31st,
-----------------
2009 2008
---- ----
Reconciliation of net income (loss) per
GAAP to Non-GAAP income:
GAAP net income (loss) $1,754 $(1,180)
Adjustments for share-based
compensation expense:
Cost of revenues 28 91
Sales and marketing 18 318
Research and development 26 122
General and administrative 178 399
Amortization of other purchased
intangibles:
Cost of revenues 39 38
Sales and marketing 211 211
Amortization of purchased product
rights 128 345
--- ---
Non-GAAP income $2,382 $344
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Reconciliation of net income (loss) per
diluted share according to GAAP to
Non-GAAP income per diluted share:
GAAP net income (loss) per diluted share $0.03 ($0.02)
----- -------
Adjustments for share-based
compensation expense 0.01 0.02
Amortization of other purchased
intangibles - -
Amortization of purchased product
rights - 0.01
--- ----
0.01 0.03
---- ----
Non-GAAP income per diluted share $0.04 $0.01
----- -----
Weighted average common shares used 61,455 61,165
------ ------
Reconciliation of net cash flow from
operating activities per GAAP to Non-GAAP
cash flow from operations before the net
change in restructuring accruals:
GAAP net cash flow from operating
activities $3,048 $2,488
Adjustments to exclude the effects of:
Net change in accrued
restructuring charges 1,368 1,404
----- -----
Non-GAAP cash flow from operations
before the net change in restructuring
accruals $4,416 $3,892
------ ------
Three Months Percentage Change
Ended Versus:
March 31st,
2009 Q1, 2008 Q4, 2008
---- -------- --------
(in millions)
Reconciliation of financial measures
after adjusting for constant currency:
Product revenues, as per GAAP $9.4 -2%
Adjustment to exclude the effect of
currency changes from the prior year 1.2 12%
--- ---
Non GAAP product revenues, adjusting
for currency $10.6 10%
----- ---
Services and maintenance revenues,
as per GAAP $13.2 -18%
Adjustment to exclude the effect of
currency changes from the prior year 1.5 9%
--- --
Non-GAAP services and maintenance
revenues, adjusting for currency $14.7 -9%
----- ---
Total revenues, as per GAAP $22.6 -12%
Adjustment to exclude the effect of
currency changes from the prior year 2.7 10%
--- ---
Non-GAAP total revenues, adjusting for
currency $25.3 -2%
----- ---
Deferred revenue, as per GAAP $29.5 2% 6%
Adjustment to exclude the effect of
currency changes from the prior year 3.9 14% 1%
--- --- --
Non-GAAP deferred revenue, adjusting for
currency $33.4 16% 7%
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SOURCE Entrust, Inc.